What are OKRs (objectives and key results)?
Definition, importance and examples
Objectives and key results (OKRs) is a goal-setting methodology used to define measurable goals and track their outcomes. In this framework, objectives refer to end goals and key results refer to how to achieve that goal.
Whether you’re a multinational corporate executive, a team of creatives working on a challenging project or an enterprising individual launching a brand, you’ll always want to have some clear business goals that you aim to accomplish. One way of setting those goals and to measure progress toward them is to establish objectives and key results, or OKRs. Here we’ll walk you through the basics of OKRs, explain why they’re important, and show how you can set your OKRs to help guide you in achieving results for your business.
Businessman and engineer Andy Grove is often attributed with having popularised the concept of objectives and key results, or OKRs, in the 1970s during his time at Intel. OKR is defined as a system that individuals, teams and organisations use to help determine their goals and track their outcomes. As Grove explained it, according to John Doerr’s 2018 book, Measure What Matters, “The key result has to be measurable. But at the end you can look, and without any arguments: Did I do that or did I not do it? Yes? No? Simple. No judgments in it.”1 These OKRs need to be verifiable and measurable with a numerical value or on any scale of 0% to 100%. In this framework, an objective is the end goal and a key result is how you’re going to achieve that goal.
OKRs establish clear goals for organizations to work toward collectively. OKRs are like the trophy at the end of a long tournament that the team wants to win. They provide a measurable target for an organisation, team or individual to hit. For smaller start-ups, Doerr writes, “OKRs are a survival tool ... Structured goals give backers a yardstick for success.” At medium-sized companies that are rapidly scaling, OKRs are “shared language for execution. They clarify expectations ... They keep employees aligned, vertically and horizontally.” And at larger enterprises, “OKRs are neon-lit road signs. They demolish silos and cultivate connections among far-flung contributors.”
According to one popular study from researchers Chris Mason and Joe Kutter, “even a minimal use of OKRs led to higher levels of performance, including an 8.5% lift in hourly sales at a call centre. Consistent use of OKRs resulted in an 11.5% increase in the chances of moving to a higher performance bracket across their corporate associate population.”2
Your business may also be familiar with key performance indicators, or KPIs, as another way of measuring success. Though they often work collaboratively, KPIs differ from OKRs in how they’re used to direct the wider scope of a business. A KPI is a stand-alone performance metric that can be applied to a programme, project or other business initiative. An OKR, on the other hand, not only measures performance but also provides context for a larger organisational goal. For example, a KPI may be an X% increase in sales. An OKR, comparatively, might have the objective of increasing brand loyalty, with the key results of increasing return customers by 30% and increasing the customer engagement score by 20%.
As Doerr outlined in an interview with Harvard Business Review, the benefits of OKRs can be remembered with the acronym FACTS, which stands for focus, alignment, commitment, tracking and stretching.3 Organisations can find a few objectives to focus on and a few key results to measure the progress toward each objective; this gives teams a clear, defined goal. From there, teams can align on how they will achieve this larger vision. Commitment is the process through which teams or individuals outline the steps they will take to stay accountable and work toward these goals. Tracking is the means through which OKR metrics are measured over time. And stretching helps individuals or organizations to push themselves toward even bigger, more ambitious goals.
The process for writing good OKRs should begin with goal setting. As a team or an organisation, you should start by aligning on the larger vision for the future of your business. From there, you can develop a few key objectives that ladder up to the overall goal for the business. These objectives should be clear, inspirational, actionable, concrete and measurable. An example of an objective could be to improve customer satisfaction and loyalty in the next quarter. This is an objective that could ladder up to an organization’s vision of being a customer-first company.
Once you’ve established your objectives, you need to move on to how you’re going to accomplish that objective. Key results are the measurable milestones that are tied to understanding how you’re tracking toward achieving this objective. For the example of improving customer satisfaction above, key results could be an X% increase in return-to-brand customers, X% increase in customer reviews and X% increase in positive customer service surveys.
After establishing the OKRs, it’s time to put the plan into action. To do this, the team or organisation needs to agree on the right process to help achieve these OKRs. Continuing with the customer satisfaction example, perhaps one way to increase the percent of positive customer service surveys may be by establishing more robust training for employees who interact with customers or improving the user experience of a customer-facing website.
Many organisations track their OKRs in spreadsheets or using other mechanisms to clearly visualise and update progress toward achieving business goals. Make sure you’re consistently tracking your progress toward your key results to best understand how you need to shift your strategy to achieve your objectives. This will give you or your team or organisation a clear path towards success.
1 John Doerr, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, 2018
2 Ben Lamorte, “Sears Holding Company Study Shows OKRs Impact Bottom Line,” 2015
3 Harvard Business Review, “How VC John Doerr Sets (and Achieves) Goals,” 2018